WVU Study Details Marcellus Permits, Income
Charleston Gazette
25 January 2011
By Paul J. Nyden
In 2009, $12B in business revenue, 24,000 jobs, $550M in wages
generated, study shows
The West Virginia Legislature is pondering whether to regulate a
process of releasing natural gas called "fracking."
The Charleston Gazette
CHARLESTON, W.Va. -- Between 2002 and 2008, West Virginia led the
nation in the number of gas drilling permits issued.
More than 2,800 permits were issued for new drilling in 45 of the
state's 55 counties.
Those statistics were part of a study released Tuesday by the West
Virginia Oil and Natural Gas Association.
The study focuses on the economic impacts of growing efforts to harvest
natural gas from major Marcellus Shale reserves.
Tom Witt, director of the Bureau of Business and Economic Research at
West Virginia University, co-authored the study with three of his
colleagues.
In 2009, the study shows, West Virginia's natural gas industry
generated more than $12 billion in business, created more than 24,000
jobs in the state and paid more than $550 million in wages.
Titled "The Economic Impact of the Natural Gas Industry and the
Marcellus Shale Development in West Virginia," the study is available
at: www.wvonga.com and www.bber.wvu.edu.
The Marcellus Shale is a formation of sedimentary rocks that developed
390 million years ago. It lies under a 95,000-square-mile area that
includes part of southwestern New York, most of western Pennsylvania,
eastern Ohio and nearly all of West Virginia.
Marcellus gas reserves lie between 3,000 feet and 9,000 feet under the
land's surface.
"Severance taxes affect locations where corporations will develop new
wells," Witt said. "Marcellus Shale could be a major source of
long-term economic development in West Virginia."
West Virginia severance taxes are now 5 percent of the gross value of
natural gas production - higher than the other states.
Ohio has lower severance taxes. Maryland, New York and Pennsylvania
have none at all.
However, the new report adds, "For overall state and local tax burden,
West Virginia's general tax policy climate is relatively more conducive
to natural gas industry operability than other states with significant
Marcellus Shale deposits."
Greg Kozera, an engineer with Superior Well Services Ltd., believes the
"fracking" process is being criticized unfairly.
Fracking, or hydraulic fracturing, pumps millions of gallons of water -
filled with sands and various chemicals - underground to fracture shale
deposits to release the natural gases trapped inside.
Kozera believes drilling and fracturing underground rocks will not
pollute water supplies. "Contamination from a septic tank, through the
soil, is far more likely to pollute them."
The Marcellus Shale formation is the second-largest natural gas field
in the world, Kozera pointed out, second only to gas fields in parts of
Russia, Iran and the Caspian Sea.
"We can produce enough natural gas to get off of foreign oil," Kozera
said. "Today, we send $1 billion overseas every day to pay for oil.
"We can finally kick our foreign-oil habit. We can bring our troops
home. There will be no strategic value for those wars. If we quit
buying oil, we can change global economics and terrorism."
Jim Crews, director of commercial operations for NiSource Gas
Transmission & Storage, said, "We also want to increase
white-collar jobs."
Crews pointed out that underground natural gas reserves also contain
materials used to make plastics.
"Union Carbide scientists here in South Charleston first discovered how
to change ethane gas into plastics," he said.
Crews also believes horizontal drilling and hydraulic fracturing are
likely to discover "other shale and unconventional hydrocarbon sources
in the [Marcellus Shale] basin, including previously abandoned
formations."
West Virginia legislators are considering whether to regulate fracking
or not.
The U.S. Environmental Protection Agency is examining the fracking
process to determine whether it endangers supplies of drinking water,
as many critics argue.
Environmental groups, such as the Natural Resources Defense Council,
believe Marcellus Shale drilling could have long-term negative
environmental impacts.
Those groups also question the wisdom of the federal Energy Policy Act
of 2005 that exempts hydraulic drillers from federal Safe Drinking
Water Act regulations, which would have required companies to reveal
what chemicals they use.
Last August, the New York Senate voted overwhelmingly to set a
nine-month moratorium on Marcellus Shale drilling. That moratorium ends
in early May.
Corky DeMarco, director of WVONGA, said Tuesday, "I am happy New York
has shut off drilling. That will help West Virginia.
"There is no evidence of contamination of water wells from fracking,"
Demarco added.
New York's Marcellus Shale reserves lie under the Catskill Mountains
and the source of almost all drinking water consumed in New York City.
By 2020, natural gas companies expect to drill about 30,000 underground
Marcellus Shale wells across the basin, according to a New York Times
article published on July 8, 2010
Many major companies already are involved in financing, exploration and
drilling Marcellus Shale wells, the article pointed out, including:
Chesapeake Energy, Halliburton, Columbia Natural Resources, Consol
Energy, Exxon Mobil Corp. and Royal Dutch Shell.
Reach Paul J. Nyden at pjny...@wvgazette.com or 304-348-5164.